The Internal Revenue Service
said yesterday that high-income earners,
tax-exempt groups and self-employed
filers would come under greater tax
scrutiny this year.
The IRS released its 2006 audit data yesterday, and it appears the agency has put its plans into action.
Income-tax audits of people earning $1 million or more has increased 33 percent this year, compared with 2005. Audits of households earning more than $100,000 jumped 18 percent.
"You’re gonna hear from us if you’re making that kind of money and we think there is a problem," IRS Commissioner Mark Everson said at a news conference yesterday.
Tax-exempt organization audits jumped 43 percent, reaching the highest levels since 2000. And the amount of delinquent tax money the agency collected also hit a record high of $48.7 billion this year.
Despite the increases, the audit rate for those groups is "still too low in many instances," Everson said.
The agency is focusing more on high-income households because "they have so many assets and access to alternative investments that require a higher level in sophistication in tax reporting," said Alan Kufeld, certified public accountant and principal with Rothstein Kass in New York.
This is a turnaround for the IRS, because most audits in recent years focused on taxpayers in lower tax brackets who used programs such as earned-income tax credit, Kufeld said.
Who gets audited and what types of deductions are scrutinized goes in cycles, he said.
The IRS said these audits will help close the tax gap, the difference between the amount people should pay and what they pay. The agency estimates the tax gap is $312 billion to $353 billion each year.
The IRS released its 2006 audit data yesterday, and it appears the agency has put its plans into action.
Income-tax audits of people earning $1 million or more has increased 33 percent this year, compared with 2005. Audits of households earning more than $100,000 jumped 18 percent.
"You’re gonna hear from us if you’re making that kind of money and we think there is a problem," IRS Commissioner Mark Everson said at a news conference yesterday.
Tax-exempt organization audits jumped 43 percent, reaching the highest levels since 2000. And the amount of delinquent tax money the agency collected also hit a record high of $48.7 billion this year.
Despite the increases, the audit rate for those groups is "still too low in many instances," Everson said.
The agency is focusing more on high-income households because "they have so many assets and access to alternative investments that require a higher level in sophistication in tax reporting," said Alan Kufeld, certified public accountant and principal with Rothstein Kass in New York.
This is a turnaround for the IRS, because most audits in recent years focused on taxpayers in lower tax brackets who used programs such as earned-income tax credit, Kufeld said.
Who gets audited and what types of deductions are scrutinized goes in cycles, he said.
The IRS said these audits will help close the tax gap, the difference between the amount people should pay and what they pay. The agency estimates the tax gap is $312 billion to $353 billion each year.
